The blinking Caps Lock LED gives it away. You have a flaky power supply. I've been through this before. The A500's power supply was weak to begin with, and now is really showing its age.
What I did was to measure the voltages on each of the pins when it was plugged in and on, then traced each pin to its respective wire. I then cut the wire from the power supply going to the A500, and spliced it into a PC power supply. That is what I did to resolve the blinking caps lock LED and intermittent resets.
Bear in mind that a bad power supply can cause other damage to your Amiga, so it really is in your best interest to get something beefier.
